A few points here...
Today was dominated by the return of oil. Nothing really special here it's just that oil had been sold too much too quickly and was being heavily shorted. Take a look at the market carpets on stockcharts.com (left of main p) and you will see that for the last month energy has just been crushed. Actually, the only sector showing green is healthcare for the month of July, though these carpets are not all-inclusive.
Along with oils move today came many of the commodity stocks. The nice earnings in US steel (X) helped as well. For those who think that steel is done check out the top holdings of the best fund manager in America, Ken Heebner, by typing in CGMFX. Of course we do not know if he currently holds these names but... Many other commodities remain fundamentally strong as well. I am waiting for the day that oil and other commodity stocks diverge... hopefully we see this soon. The last post, which just touched upon sector rotation and the battle it can have with earnings, provided a good context for some of the moves in the commodity stocks. Note that CHK, mentioned on the last post, bounced 8%... it was nicely up against the 200 SMA... and the commodity bounce obviously helped a lot here. On the other hand GIGM, with it's nice wedge forming chart, and MPEL, another Chinese gaming stock, did not move up today. But put these on your screens as these stocks have become very cheap and btw the Olympics are coming. CTRP is a good company, there are many many... FXI bounced off its' bottom, reflected off of the 50 but stayed above the middle Bollinger Band. I am really looking into these names as we move forward here.
That leads us to solar stocks. Many have just been crushed but have quite a bit of promise going into the election in my opinion. I am still looking for the catalyst to step in but perhaps...
So let's talk a bit about FSLR. They beat and upped guidance... again... and are loaded with cash (see post: follow up solar under recent posts). I will be looking for a move in some of these names soon. Currently I like FSLR, CSIQ, and SOL to round out the thin film, poly, and wafers. This is still subject to more research on my part and these are not formal recs... I do want to say that Zack's, which is quite good overall, has been behind FSLR for a while now. When you consider their growth and the fact that they always beat, have cash, and are not dependent on polysilicon supply, I have to admit they may be pretty good.
Let's see how they do and if their earnings help to spark a move in the solars overall.
At the same time, I am very interested to know how long the commodities rally lasts and if we start to see any separation between the charts of different commodity names. On a final note I peeled off the short sides of the MOS and POT hedges I purchased... the buy to cover stops took care of this in the 127 and 207 areas respectively while keeping the longs... If I hadn't decided to hedge these commodities by shorting a little DIG at 89 I would have had an even better day... but the hedge is literally 1/7 the position in the fertilizers and I quite frankly like a little split, or psuedo-arbitrage, if you will, between rising potash stocks and falling oil stocks as we move into the fall driving season. Note that I stayed the heck away from DIG.DUG when it just ready to get short squeezed at 82 on DIG...perhaps I was a bit early and will cover if we go with volume over 95... But there is a price for some insurance... this hedging thing may be a very solid strategy going forward... you pay a little to keep a lot in many cases...
Regarding the fertilizers... for today at least... ICE cube said it best... Please note that despite the fact that "I got to say it was a good day" it is only one and things can flip in a hurry. Still, Heebner and Montgomery and many others have MOS and POT as major holdings... for good reason...
"The Yellow Rose Street Beat" is for informational purposes only. It does not give investment advice.
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